LK Bennett makes loss but latest sales improve, US, e-tail and new markets are key
LK Bennett has seen some challenging times of late but the footwear-to-fashion retailer believes its turnaround is on track, despite more red ink in its annual accounts.
Its big reasons for optimism are CEO Darren Topp, the re-involvement of founder Linda Bennett (who remains part-owner of the business) in the firm, a new strategy, and a clear improvement in current trading, despite the challenging conditions out there. The company said that comparable sales as the firm approaches the end of its financial year next month are ahead by 6%.
CEO Topp was appointed last September and may not have been able to perform any magic for BHS in his time at the helm there (given the insurmountable problems that business faced), but LK Bennett is fully behind the recovery plan he unveiled late last year.
That plan is being built around Linda Bennett’s “original vision of delivering affordable luxury” on the high street, as well as strengthening the design, buying and merchandising teams, getting Linda Bennett back on board (albeit only part-time) to add the founder vision that made the company a success in the first place, moving into new categories such as swimwear (in a deal with Biondi) and jewellery, “stretching price points” to appeal to a broader customer base, and improving the in-store experience.
All that should help the company as it pursues its fairly ambitious expansion plans with it targeting 40 new stores a year for the next three years both in the UK and abroad. Most will be in the domestic market but the brand has already added international stores this year with locations in new markets China, Russia and Qatar, as well as extra stores in the US, Europe and Britain.
And to add an extra edge to the growth programme, the company has received an additional £6m in investment cash from its two main shareholders, Linda Bennett and Phoenix Equity Partners.
LAST YEAR'S LOSSES
So that’s the future, but what actually happened in the last financial year? The company’s loss widened to £4.5m from £1.1m and turnover fell 1% to £92.3m, with gross profit dipping 2% to £58.3m. But comparable sales did manage to rise. They may have edged up only 1% but at least they didn’t turn negative and that 6% rise in more recent months shows momentum is clearly with the business.
That was also clear from the online results with e-sales up an impressive 19% last year. And with another plan for the current year and the years ahead being to invest more in the firm’s UK and US e-stores, that should be money well spent. UK e-sales rose 18% last year and the US/Canada site powered ahead by 35%.
Wholesale also continued to turn in a respectable performance with sales up 2.3% as the US, Middle East and Asia all grew.
The company also said that it took action last year to rationalise its business and said this has led to improved stock management ensuring greater availability of its product across all channels. It also closed four lossmaking stores in the UK and opened concessions in harrods and John Lewis.
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